Both EPA and business happy with Supreme Court's greenhouse gas ruling

Talk about a split decision: Both the Environmental Protection Agency and business groups are declaring victory after the U.S. Supreme Court imposed limits on the agency’s ability to regulate greenhouse gas emissions from power plants and other stationary sources.

The EPA is happy because the 5-4 decision affirms its authority to regulate greenhouse gas emissions under the Clean Air Act. But the court ruled greenhouse gas emissions alone can’t trigger EPA enforcement of the law’s Prevention of Significant Deterioration (PSD) program, which requires a permit before any major source of air pollution can be constructed or modified. To obtain such a permit, the facility must install the best available technology to control emissions.

The court ruled, however, that the EPA could require facilities that are subject to PSD regulation because of other air pollutants to also control greenhouse gas emissions.

“It sought to regulate sources that it said were responsible for 86 percent of all the greenhouse gases emitted from stationary sources nationwide,” he said. “Under our holdings, EPA will be able to regulate sources responsible for 83 percent of those emissions.”

Business groups agreed that the decision should protect many businesses from being subjected to PSD regulations.

'Because of the way the EPA interpreted the statute, the agency sought to treat apartment complexes as if they are power plants,” said Kevin Kelly, a home builder from Wilmington, Del., who chairs the National Association of Home Builders. “That makes absolutely no sense and would have dealt a major setback to the housing recovery.”

The ruling “will prevent the agency from sweeping thousands of small businesses and factories into the PSD program,” said Cal Dooley, president and CEO of the American Chemistry Council.

The decision does not apply to EPA’s proposed regulation that would require existing power plants to reduce their carbon dioxide emissions.

But the court’s reasoning in this case could affect the way it looks at that regulation, if it’s challenged as expected.

The court’s ruling “suggests that in controlling greenhouse gases, EPA should look at the source,” said Thomas Lorenzen, a partner at Dorsey & Whitney who worked for more than a decade at the Justice’s Department’s environmental division. “This could raise substantial questions about EPA’s proposed standards for existing power plants, which look to regulate the entire electricity generation sector, rather than just the individual power plants.”